Figyan

Income Tax

How to calculate tax on voluntary retirement scheme or VRS

Last reviewed on I By

Voluntary retirement scheme or VRS is a technique used by organizations to reduce their existing workforce. Its applies to all employees who have completed 10 years of service or is above 40 years of age. VRS is generally used as an alternative to retrenchment process, which involved lots of legalities and complex procedures.In general voluntary retirement scheme is used … [Read more...] about How to calculate tax on voluntary retirement scheme or VRS

How allowances taxable under the head income from salaries

Last reviewed on I By

Allowances are fixed amounts paid by employer to employee for meeting certain type of expenditures. People often ask questions like:Does basic salary includes allowance?What is the difference between salary and allowance?Is allowance included in salary?Which allowances are exempt from income tax?To answer these questions, we have to understand the … [Read more...] about How allowances taxable under the head income from salaries

How to calculate tax exemption on retrenchment compensation

Last reviewed on I By

Retrenchment compensation received by the workmen under the Industrial Disputes Act, 1947 or any other act, rules, notification, order, award, contract of service or otherwise is exempted under section 10(10B) of the Income tax act, 1961. In general, its paid by employer to employees when an undertaking is closed or employees are transferred due to agreement or compulsory … [Read more...] about How to calculate tax exemption on retrenchment compensation

How is exemption and tax on leave encashment calculated

Last reviewed on I By

Based on eligibility, employee can avail different types of leave. If the company has a policy to carry it forward, then unavailed leave remained for a year can be carried forwarded to the next financial year. Based on employer’s policy, an employee is allowed to encash accumulated unavailed leave either during the service or after retirement / resignation. It's known as leave … [Read more...] about How is exemption and tax on leave encashment calculated

Deduction from gross salary to calculate income from salaries

Last reviewed on I By

In order to calculate income under the head salaries, you are allowed to claim deduction from gross salary. These tax benefits are specified under section 16 of the income tax act, 1961.Tax benefits under section 16 is different from tax deductions allowed to an individual under chapter VI-A of the income tax act 1961.To calculate your taxable income and actual tax … [Read more...] about Deduction from gross salary to calculate income from salaries